The S&P/TSX composite index dropped 59.54 points to 12,529.55.
The Canadian dollar was up 0.02 of a cent to 98.91 cents US.
Meanwhile, the U.S. Commerce Department reported that retail sales edged up 0.1 per cent in April, boosted by increased spending on cars and clothing. March had seen a 0.5 per cent decline — its largest drop in nine months.
Economists had expected another contraction brought on by higher Social Security taxes that kicked in this year.
In a separate report, the department also said businesses left stockpiles unchanged in March for a second straight month as their sales fell 1.1 per cent, offsetting a one per cent gain in February.
A lack of inventory building could slow economic growth because it means businesses are ordering fewer factory-made goods.
The Dow Jones industrial average dropped 26.81 points to 15,091.68. The Nasdaq saw a small uptick of 2.21 points to 3,438.79, while the S&P 500 index was barely positive with an increase of 0.07 of a point to 1,633.77.
Craig Fehr, a Canadian market strategist with Edward Jones, said the resource-heavy TSX was falling on uneven economic data from China and the United States.
"The Chinese data and concerns about future growth out of China has really weighed on the commodities space," said Fehr from St. Louis, Mo. "We're going to get these periods where the market is going to pull back a little bit."
At this point, it's difficult to predict if this the beginning of a downward market trend or a blip.
"We're going to continue to get choppiness, largely because the economic data worldwide tends to be largely uneven. From day to day, we get these varying reports," said Fehr.
"This choppiness in commodity prices is going to continue because we haven't seen a whole lot of momentum in one direction or another behind the global economy."
Gold and oil continued to draw back from last week's gains.
June bullion dropped $2.30 to US$1,434.30 an ounce as the gold sector fell the most on the TSX, down more than two per cent. Stock in the majority of companies in the sector fell along with it, with Barrick Gold Corp. (TSX:ABX) down 2.89 per cent, or 61 cents to C$20.50 per share.
The June crude oil contract was down 87 cents to US$95.17 a barrel, as the energy sector dipped by 0.6 per cent. EnCana Corp. (TSX:ECA) fell three per cent or 58 cents to C$18.74 per share.
July copper was up a cent at US$3.36 a pound, while the metals and mining sector declined 1.83 per cent. Rio Alto Mining (TSX:RIO) stock was up 0.85 per cent, or three cents, to $3.57, while Teck Resources (TSX:TCK.B) was down nearly three per cent, or 80 cents, at C$28.71.
The country's largest airline, Air Canada (TSX:AC.B) saw its shares plummet by 7.83 per cent, or 17 cents, to $2 amid news that it is moving to cut costs by $50 million in the current quarter.
In an internal memo obtained by The Canadian Press, Air Canada chief executive officer Calin Rovinescu said the company will put in place a hiring freeze, end the use of consultants and find more savings from suppliers.
Meanwhile, the health-care sector on the TSX enjoyed a lift of more than two per cent as shares in nursing home operator Extendicare Inc. (TSX:EXE) shot higher on last week's news that it plans on separating its Canadian and U.S. businesses due to the complexity of operating on both sides of the border. Shares climbed nearly seven per cent, or 42 cents, to $6.84.
Overseas, markets in Asia and Europe were mixed, a possible signal that the record-high climbs seen last week may be coming to an end.
The exception was Japan's Nikkei which jumped 1.2 per cent to 14,782.21, its highest close since December 2007 after a weekend meeting of G7 financial leaders that did not produce any objections to its aggressive monetary stimulus program.
The index has soared more than 42 per cent since the beginning of the year as the yen has dropped sharply in response to the Bank of Japan's policy.